“Are banks dead?” asked Gavin Krugel at this year’s Mobile Money Summit. Variations of this question been posed by provocateurs in the mobile money world for years. Is it possible that mobile money services will solve so many of its users’ financial challenges that people will see little need for bank accounts, choosing to keep their money in m-wallets instead? In this vision, bank accounts in the developing world will be a bit like fixed-line telephones: used by a few, but not by the mass, and certainly not the poor. A conversation I recently had with a taxi driver in Kenya—a country where more than half the adult population uses Safaricom’s M-PESA—illustrates why talk of the death of banks is unfounded. He explained that M-PESA is one of a portfolio of financial tools that he uses to manage his money, and that his bank is an indispensible part of that portfolio. In fact, I’ve come to believe that mobile money services can increase, rather than dampen, demand for traditional banking services.
Archive
Archive for Global
Regulating New Banking Models that can Bring Financial Services to All
By: Andrew Zerzan: September 2nd, 2010Today we are pleased to share a new paper written by Alexandre, Mas and Radcliffe titled ‘Regulating New Banking Models that Can Bring Financial Services to All’. The paper argues that “branchless banking” is misleading as it implies that we can do away with bank branches altogether. Rather, they advocate for branch specialisation where the branch role is higher-level, meeting more sophisticated needs such as complex credit services, liquidity, and customer redress. Basic services — those which reach the poor directly, are often better provided by non-bank retail outlets — not unlike those that mobile network operators already use to provide mobile money.
Will Mobile Money Bring Microinsurance to the Poor?
By: Camilo Tellez: August 31st, 2010Why is insurance widely available to those in the developed world, but not the poor—whose demand for insurance, given how close they live to the economic brink, is arguably greater? The answer is simple: transaction costs. The cost of selling and underwriting insurance and of administering a claim does not decrease in proportion to the value of the policy. Using traditional channels and processes, insurance companies simply cannot write policies with values below a certain floor without pricing them unrealistically.
Can Pakistan’s flood victims find hope in mobile money?
By: Maha Khan: August 26th, 2010While mobile platforms have been used by aid agencies to distribute electronic vouchers redeemable for cash or food, such as the UN World Food Programme’s (WFP) pilot project for Iraqi refugees in Syria, mobile money is still relatively new in this field. Aid agencies are, however, coming to realize the cost effectiveness, speed, and resilience that mobile money payments can provide in emergency situations.
Getting the Agent Commission Model Right
By: Paul Leishman: August 20th, 2010By now, most mobile money practitioners recognize that for a service to succeed, the agents that support it need to be making money. In recent months, we’ve written about how mobile network operators have carefully managed their customer/agent ratios over time to ensure agents are provided with a sufficient volume of transactions to stay interested – but volume is only half of the equation. To keep agents happy, mobile network operators must also ensure the commission models they present to agents are well designed
The Hidden Costs of Inactive Users
By: Neil Davidson: August 12th, 2010Around the world, mobile money deployments are racking up large numbers of new customers. But as certain commentators have noted, these numbers are sometimes misleading. In some deployments, a gap is opening up between the number of registered users and the number of active users. Does this make the number of registered users irrelevant? Quite the contrary—a large gap between the number of registered and unregistered customers represents a big problem. Operators have to spend money for every customer that they acquire; if those customers don’t start using the service, then the operator who signed them up has started to dig a financial hole for themselves. And those holes can be pretty deep.
Who Says Elephants Can’t Dance? Structuring Win-Win Partnerships Between Banks and MNOs
By: Amitabh Saxena: August 2nd, 2010By now it’s a well-known fact: strategic alliances in general are complex to structure, and harder to manage. This is especially true when stakeholders are large, powerful, and from different industries with fundamentally distinct business models, as the case is with banks and mobile operators. What, then, are different ways that these two parties can structure a mutually beneficial partnership to offer mobile money?
USAID Releases Mobile Financial Services Risk Matrix
By: Camilo Tellez: July 29th, 2010Mobile Financial Services offer significant opportunities for improving the efficiency of financial services by expanding access and lowering transaction costs. The explosive growth of use of mobile money has had the unintended benefit of increasing public involvement in the formal financial system, including expansion of savings accounts in the regulated financial intermediaries.
Methodology for Assessing Money Laundering and Terrorist Financing Risks
By: Camilo Tellez: June 15th, 2010Mobile money services are emerging all over the world and financial regulators are unfamiliar with the money laundering and terrorist financing (ML/TF) risks arising from these new services. The current anti-money laundering and combating the financing of terrorism (AML/CFT) rules are often applied disproportionately to the risks involved, thus hampering the adoption of mobile money services amongst consumers, the poor in particular. It is, for example, disproportionate to put a high customer due diligence burden on very poor customers who are transacting very low amounts for legitimate reasons. Excessively strict ‘know your customer’ (KYC) rules can be impossible for the poor to comply with, keeping them locked into the informal economy without preventing ML/TF.
2010 Leadership Forum at MMS in Rio de Janeiro
By: Guest Blogger: June 11th, 2010Due to its timing at the end of the conference, the day-long Leadership Forum was a good venue for distilling some of the big-picture regulatory questions that emerged during the preceding sessions. Fairly quickly, Leadership Forum panelists and participants converged on three broad areas of consensus. First, high-quality, accountable agents are necessary for successful mobile money deployments. Second, proportionality in applying customer risk management rules is essential. Third, engagement with financial regulators is a critical success factor for mobile money deployments. The challenge in the Leadership Forum was to discuss just what these broad points meant at a more granular level.
News Tracker
- 1. Vodacom South Africa launches M-Pesa
- 2. Easypaisa introduces donation service
- 3. Yu Cash offer international remittances from US and UK
- 4. Easypaisa introduces international money transfer service
- 5. M-Kesho deposits hit Sh900m
- 6. Tigo Pesa Launches in Tanzania
- 7. Aid groups using cellphones to reach the world's poor
- 8. MTN Cameroon launches mobile money service
- 9. Safaricom's M-Pesa Users Rise to 61% in July From Year Ago
